Why will Arun have a higher income from cultivation compared to Shyamal?
Arun will have a higher income from cultivation compared to Shyamal due to several advantages. First, Arun receives a bank loan at only 8.5% per annum, whereas Shyamal borrows from a trader at 3% per month (36% per annum), which is a much higher interest rate. This means Arun pays significantly less interest on his loans.
Second, Shyamal is forced to sell his crop to the trader at harvest time when prices are low, as part of the loan condition. In contrast, Arun can store his produce in cold storage and sell it later when prices rise. Additionally, Arun has 7 acres of land compared to Shyamal's 1.5 acres, giving him a larger scale of production. These factors combined allow Arun to retain more income from his cultivation.
Explanation
This question tests students' understanding of how terms of credit affect farmers' incomes. The key points to highlight are: (1) the vast difference in interest rates - bank loan at 8.5% per annum versus trader's loan at 36% per annum; (2) the exploitative condition imposed on Shyamal to sell crops at low prices to the trader; (3) Arun's ability to use cold storage and sell when prices are higher; and (4) the difference in landholding size. Students should understand that cheaper credit and better market access directly impact farmers' net income from cultivation.